the WX in Northern Virginia today is just down right ugly … snow, winter mix, wind has picked up. Have been doing posts, checking on the wife w/ a herniated disk and the 9 year old w/ a sinus infection and then playing Pink Floyd looking for patterns. As I was going thru the charts I realized 1) I have saved way too many of them … and 2) there are some amazing ones out there …
here’s a chart that simply shows the aftermath of parabolic rises … isn’t it a beauty?
here’s the updated chart …
parabolic rises have very powerful corrections …
and here’s the update on GMCR – amazing !!! I haven’t looked at it in a couple years!
CLIFF NOTES: many, many, many charts are showing these parabolic rises … Sir Isaac Newton has yet to be proven wrong w/ his theory of gravity!
IF, we can get a close tomorrow in/around 4106 on the NASDAQ THEN we have an equality “square out” of price and time … 4106 PRICE and 4106 calendar days is the “reason” we are banging around this area of the NAZZIE. the LOW TIME squares out the HIGH PRICE. Just keep an eye on it …also, some MAJOR resistance that is coming from the all time low in 1974.
REMEMBER – this doesn’t have to happen. It’s just another tool and something to be aware of … combined w/ multiple confirmations PRICE and TIME square outs can be pretty powerful. Let’s watch price action this week …
of note is the Global Equity ETF (ACWI) and the SELL pattern that is appearing as we showed in our last “around the world” update shown below. Overall, nothing to crazy but the analysis appears to have been correct. Summary: NONE of the “around the world” indices have come even close to making new highs from the 2007-2008 time frame.
Palladium has an extremely nice sell pattern and multiple patterns were hit or are about to hit …NASDAQ futures have an extremely strong target and sell pattern coming in right here, right now
this is the one sector that isn’t showing a clear SELL signal – yet. As you can see below w/ the XLE a case can be made for another 10% higher or it needs to start down now…energy could be the one sector that holds this puppy up for now.
Energy, a case could be made for continued strength thereby delaying the move down in the S&P
and finally, part V was the look at ratio’s and sector rotation:
XLP/SPX ratio showing a beautiful BUY (SELL equities) pattern …
US DOLLAR low in here or perhaps a little lower
ENERGY needs to be watched like a hawk….
Do you really want to be long this market? The only way I would stay LONG is if all the above fails and, quite frankly, that could happen. So, watch ENERGY and DOLLAR strength for first clues.
our S&P post last week of parts I-V spelled out the overall look and feel for the S&P as we approached and eclipsed new highs … we took a look at technology, financials and energy. additionally, throughout the past weeks, we have walked thru the circle of life for fixed income, the dollar and certain commodities. Additionally, we looked – globally – at the current state of affairs for the other equity indexes. this blog post will be a quick update to where I “think” we are and some key levels to watch over the next week …
Financials: a pattern did complete at the high for XLF at 20.92. Higher targets also remain from 21.50-22.20. Would really like those “higher” targets to be attacked to get a true feel of the market but, for now, realize 20.92 could be it on the financials. if this is complete, then it does not spell “good” for the overall index.
Energy: as we showed in the last post a potential terminal target remains higher in around 97 on the XLE. However, we also showed at pattern completing in/around 85.20. that has hit and a break below 80 (weekly close below) would not spell “good” for the overall index. Crude sold off on Friday and the real test will be it’s “return to the top of the triangle trendline” to see if it bounces for the higher target shown in the past. the $XOI and $OSX are also showing weakness at targets described in the past.
Technology: I am breaking down the overall technology look into the NASDAQ index (NAZZIE). if you look back at the “technology” post from last weekend you’ll see that we still have some higher targets 30+ points away. Too early to tell if Friday was a high but would, again, certainly like the upper targets to get hit and for all three of the major components of the S&P to go down together.
I still feel that the “big guys” are going to “tip” their hand and “try” to rotate out of the high flyers and into the staples (deodorant, tooth paste, water, etc.). I am watching this ratio like a hawk. This is a perfect set-up for a BUY of the ratio which sets up a (HISTORICALLY) SELL on the S&P. That target is a little lower and, again, would really like to see that level hit/targeted.
XLP / $SPX ratio analysis
Last, I had the WONDERFUL chance to train w/ Joe Dinnapoli of http://www.fibtrader.com a couple years ago. Wonderful training and very very important information on the “internals” of the market and it’s structure and the importance of liquidityin the world of program trading, micro trading, the bid-ask and the false injections of cash that has occurred w/in the house of cards this market has produced. Take the time to watch this series of videos: http://www.youtube.com/watch?v=MQed-Aqay5w I also ask you to take a look at the picture/explanation in part 2 of 5 and in/around 10:38 and 13:01 for part 4 of 5. The series is a couple years old, but still so extremely valid and important. If you read my post a couple hours prior to the FED announcement you’ll find that I correctly surmised that the QE would continue … believe it or not, sooner or later, the illiquid nature of todays market will, ultimately, put us at risk for a potentially major move. This is ONLY a probability and one that has, more than likely, a low chance of ever happening. But education around potentialities isn’t so bad, is it?
I AM NOT DESIRING OR CALLING FOR A CRASH OR ANYTHING LIKE THAT …however, the market has been propped up by trillions of dollars and, therefore, liquidity is an issue. If this is an issue then why not put some of the profits in the bank and let some or a little ride?
What if this DJIA chart is correct …. ?
DJIA SELL pattern completed/completing w/ potential targets depicted base on the lack of liquidity present in the market
here’s the updated chart …
